Tracking Wall Street’s rout, Asian markets slumped, led by losses in the KOSPI (-3.99%), Nikkei 225 (-2.85%) and TWSE (-1.98%), as renewed US-Iran fighting pushed oil prices higher and deepened the global bond selloff, reviving fears of higher-for-longer rates. Brent crude surged to ~USD96 as renewed attacks raised risks of disruptions through the Strait of Hormuz, adding to inflation pressures and lifting government bond yields, weighing on growth and technology stocks. Markets now raised the odds of a 25bps Fed hike on 16 Sep to 68% from 40% a week ago, while the BOJ is also widely expected to hike on 18 Sep policy decision.
Wall Street rebounded after a sluggish Sep debut (Dow +0.56%, S&P 500 +0.46%, Nasdaq +0.45%), as a recent rise oil prices and Treasury yields had pressured creditsensitive sectors. On corporate front, Alphabet gained 0.63% after a federal court ruled
Google need not divest its ad exchange, instead requiring interoperability with rivals while Nvidia jumped 3.2% on reports of a potential USD14bn Hugging Face acquisition. Dell surged 15.8% after beating estimates and raising guidance, while
Broadcom fell 1.1% on disappointing guidance. Ahead of Friday’s NFP, ADP payrolls rose just 38k in August, below the 48k consensus, following soft July JOLTS data.
After sliding 48 pts over three straight sessions, the KLCI gained 8.2 pts to 1,708.7, driven by bargain hunting in banking and commodity-related heavyweights, including PCHEM, PMETAL, KLK, IOICORP, SDG, MAYBANK and PBBANK. However, breadth remained negative at 0.57, albeit improving from 0.37, as selling pressure eased following the MSCI rebalancing. Trading volume fell 23.9% to 4.20bn shares, while value declined 20.4% to RM3.52bn. Foreign institutions remained net sellers for a 2nd session in Sep (-RM57m; 5D: -RM630m; MTD: -RM545m; YTD: – RM5.00bn), following a RM1.98bn outflow in August. Local institutions also net sold RM55m (5D: +RM351m; MTD: +RM157m; YTD: +RM5.05bn), while retailers emerged as net buyers (+RM112m; 5D: +RM479m; MTD: +RM388m; YTD: -RM0.05bn).
After rallying 95 pts from its YTD low of 1,655 on 29 Jun to 1,753 on 26 Aug, the KLCI skidded 57 pts to 1,696 before ending to 1,708.7, holding above key MA200 at 1,698. Thus, no confirmed breakdown yet, with the index still range-bound despite a tentative close below the descending trendline. A decisive break below 1,698 and 1,685 (50% FR) would reinforce downside risk toward 1,655 (YTD low) and 1,639 (23.6% FR).
Conversely, reclaiming the descending trendline and 1,730 (76.4% FR) would negate the bearish setup and reopen upside toward 1,753 and 1,771 (YTD high).
HLIB says it maintains a constructive outlook on Malaysian equities, underpinned by a selective earnings recovery and strong thematic plays, however it also expects the KLCI to remain range-bound through 2H26 as a confluence of external and domestic headwinds caps upside. Externally, re-escalation in Middle East tensions, hawkish Fed expectations and elevated US yields could sustain foreign capital rotation away from EMs.
Domestically, potential earnings disappointments from a higher-for-longer cost environment, the KLCI expansion overhang and emerging GE16 political jitters could further constrain gains.
